In what is being seen as one of the most positive developments for China, Ford Motor has named Geely Automobile Holdings as the preferred bidder for the firm's much sought after Volvo unit. After the announcement, Geely shares went up quite smartly, soaring to a new high figure of HK$3.0.

China's Zhejiang Geely Holding Group was named by Ford, although the possible sale price has still not been disclosed. If the deal goes through, this would be the biggest overseas acquisition that China's rapidly growing auto market has ever seen.

"I think the market is still divided on the Geely deal", said Chen Qiaoning, an analyst with ABN AMRO TEDA Fund Management. "If its parent indeed gets Volvo and the deal serves it well, the listed firm would benefit tremendously, but if they are unable to handle Volvo and things happen just like they did in the SAIC-Ssangyong deal, the listed company will suffer".

The sale and bid prices have not yet been made public, but reports have pegged the price quoted by Ford for the Swedish unit to be somewhere around $2 Billion, which is much lesser than the $6.45 Billion it had paid for the acquisition in 1999.